Proof That AT&T Needs To Extend That iPhone Deal

picture-16During its earnings reports today, AT&T posted numbers that easily beat Wall Street’s expectations. Yes, profits were down, but we’re in a down economy, and there’s simply no denying that things would have been much, much worse without the iPhone.

First of all, AT&T announced that it had a net gain of 1.2 million subscribers for the quarter. That’s solid, but guess why? It also announced that it had gained 1.6 million new iPhone activations. Some of those were existing customers, but 40 percent of them were new to AT&T. Without the iPhone it seems fairly likely that AT&T may have lost customers for the quarter. It certainly wouldn’t have gained over 600,000 new iPhone ones, and given the numbers, you can imagine that a good number of existing customers would have left had they not upgraded to the iPhone.

Perhaps even more incredible though is that AT&T actually saw a 38.6% increase in overall wireless data revenue. And that’s despite the fact that AT&T actually activated less iPhones for the quarter than it had the previous two quarters. But clearly, existing data usage for customers is going through the roof, which again is led by the iPhone.

It’s also led by text messaging, which, despite continuing to be a colossal rip-off, saw usage double from a year ago. Over 90 billion text messages were sent on AT&T’s network in the first quarter. That’s incredible, and is bringing in AT&T a hell of a lot of money.

So I think it’s pretty clear why AT&T wants to extend its deal with Apple through 2011. Without the iPhone, AT&T’s quarter would have likely been a very bleak one. Reports are that the company is revamping its network in time for the next version of the iPhone, probably coming at some point this summer, but there continues to be a lot of talk of how bad the network is. Those of us who were at SXSW experienced it firsthand, but again yesterday, the network was having major problems in the San Francisco Bay Area. If AT&T wants to know why non-iPhone customers are leaving, that’s the reason.

[photo: flickr/visual.dichotomy]